Sun Life Financial has announced that they will be issuing a new series of perpetual preferreds, Series 5.
The dividend rate is 4.50% and the expected closing date is February 2. The redemption schedule is:
Sun Life 4.50% Perp Ser 5 Redemption Schedule | ||
From | To | Price |
2012-3-31 | 2013-3-30 | $26.00 |
2013-3-31 | 2014-3-30 | $25.75 |
2014-3-31 | 2015-3-30 | $25.50 |
2015-3-31 | 2016-3-30 | $25.25 |
2016-3-31 | INFINITE DATE | $25.00 |
It seems rather odd that the dividend rate is the same as on the recent bank issues despite the slightly lower credit on Sunlife: it’s rated P-1(Low) by S&P, Pfd-1(low) by DBRS.
An interesting feature of the terms is that there is a Mandatory Non-Payment of Dividends in the event that the Minimum Continuing Capital and Surplus Requirements (“MCCSR”) ratio of Sun Life Assurance Company of Canada was less than 120% at the end of the preceding quarterly financial reporting period. Another measure of financial strength to attempt to understand and worry about! According to their 2005 Annual Report, this ratio was:
MCCSR Ratio, Historical pro-forma | |
2003 | 232% |
2004 | 238% |
2005 | 216% |
According to the same document:
Sun Life Assurance continues to be subject to the MCCSR required capital for a life insurance company in Canada. OSFI generally expects life insurance companies to maintain a minimum MCCSR of 150% or greater, based on the risk profile of the relevant insurance company. Sun Life Assurance’s MCCSR ratio as at December 31, 2005 well exceeded the levels that would require any regulatory or corrective action. Additional details concerning the calculation of available capital and MCCSR are included in the 2005 AIF of SLF Inc. under the heading “Regulatory Matters”.
So it would seem that long before there was a Mandatory Non-Payment of Dividends the company’s name would be all over the front page anyway. But it is another thing that has to be reviewed!
Update: Forgot to give the size! Ten million shares @ $25.
Update & Bump: Here’s a comparison of some curve prices:
Curve Price Analysis by Taxable Curve | |||
Component | SLF.PR.? | SLF.PR.D | BNS.PR.L |
Price due to base-rate | 23.16 | 23.05 | 23.15 |
Price due to short-term | 0.04 | 0.04 | 0.04 |
Price due to long-term | 0.58 | 0.58 | 0.59 |
Price due to Liquidity | 1.45 | 1.44 | 1.49 |
Price due to error | 0.02 | 0.02 | -0.03 |
Price due to Credit Spread (Low) | -0.52 | -0.52 | 0.00 |
Curve Price | 24.73 | 24.61 | 25.24 |
Other Data | |||
Annual Dividend | 1.125 | 1.1125 | 1.125 |
1/25 Closing Quote | Issue Price 25.00 | 24.71-75 | 25.05-07 |
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